Tesoro Logistics’ Earnings Grew 65% in 4Q15
Tesoro Logistics’ 4Q15 EBITDA
Tesoro Logistics (TLLP), an MLP and subsidiary of Tesoro Corporation (TSO), reported its earnings for the fourth quarter of 2015 yesterday. It reported 65% YoY (year-over-year) growth in EBITDA (earnings before interest, tax, depreciation, and amortization) for the quarter. Its adjusted EBITDA of $155 million for 4Q15, however, missed consensus EBITDA estimates by 12%. Tesoro Logistics’ distributable cash flow grew 104% to $104 million in 4Q15.
The EBITDA growth was driven by contributions from its Rockies natural gas business, which includes QEP Midstream Partners and related assets acquired from QEP Resources (QEP) in December 2014 and July 2015.
The Rockies natural gas business contributed $285 million to Tesoro Logistics’ adjusted EBITDA, exceeding the $275 million target for 2015. The Los Angeles storage and pipeline assets that TLLP acquired from Tesoro Corporation in November 2015 also contributed to the EBITDA growth. The above graph compares TLLP’s EBITDA estimates with adjusted EBITDA over ten quarters. Tesoro Logistics forms ~0.6% of the Guggenheim Raymond James SB-1 Equity ETF (RYJ).
4% increase in distributions
Tesoro Logistics’ 4Q15 distribution per unit of $0.78 was 4% higher than its 3Q15 distribution. It represents a 17% YoY increase. This was the 19th quarterly increase in a row of ~4% or more.
The challenging commodity price environment has forced many MLPs to announce flat distributions. Energy Transfer Partners (ETP) announced a 4Q15 distribution of $1.06 per unit, which was the same as its 3Q15 distribution. Similarly, Plains All American Pipeline (PAA) announced flat distributions for 4Q15 as compared to 3Q15. On the other hand, Kinder Morgan (KMI) slashed its 4Q15 dividends by 75%.
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